OPERATIONS MANAGEMENTPROJECT

OSWAL WOOLEN MILLS LIMITED

OSWAL WOOLEN MILLS LIMITED

ABOUT THE COMPANY

Oswal Woollen Mills Limited (OWM), is the flagship company of the Nahar Group of Companies (the Nahar Group). The Nahar Group is an industrial conglomerate based at Ludhiana in Punjab with group turnover in excess of Rs. 19,000 million for Fiscal 2006. The Nahar Group is one of the oldest and well recognized business houses in India. the Company was incorporated in 1949 by Late Mr. Vidya Sagar Oswal, father of Mr. Jawahar Lal Oswal, the present Chairman and Managing Director. The Company is one of the pioneers of the organized Indian woolen hosiery industry. They made a modest beginning as a manufacturer of hosiery items, which was followed by setting up a worsted woolen spinning plant of 800 spindles in 1954 to serve as a backward integration of the then existing manufacturing activities. They believe that this worsted woollen spinning plant is one of the first worsted woollen spinning plants in the Northern India. Marching ahead in the journey and keeping pace with overall industrial development in India, the Company is now a vertically integrated woollen textile company, having presence in diverse market, with wide range of products including woollen hosiery and cotton garments. In their woollen hosiery segment, they start the operations with import of raw greasy wool mostly from Australia and their products include various types of specialty yarns, such as, worsted woollen yarn, lamb wool yarn, acrylic yarn, various types of wool based blended yarn, fancy yarn, hand knitting yarn and knitted and hosiery garments etc. they subsequently added cotton garments to their existing product portfolio during Fiscal 2002, which they outsource as per their requirements and sell under their own brand name. Since March 2006, they have started manufacturing indigo dyed specialty denim fabric, which has added to their existing vast range of product portfolios. The manufacturing facilities are spread across various locations in and around Ludhiana in Punjab fully backed by the facilities for product development, design studio and efficient sampling infrastructure to provide quality products to our customers. Currently, they are employing over 4,000 persons and their present manufacturing facilities include 26,248 spindles to manufacture worsted woollen yarn besides machines for weaving, knitting, dyeing and finishing. Presently, our manufacturing facilities are producing approximately 2.5 million lbs of wool tops per annum, 750,000 pieces of readymade knitted garments per annum and 10 million meters of denim fabric per annum. They are the registered owners of well-known trade

name ‘Monte Carlo’ for selling their woollen hosiery and cotton garments. ‘Monte Carlo’ has been recognized as a ‘Super brand’ for woollen hosiery garments since Fiscal 2003 by the International Society for Super brands.

Their distribution channel comprises of a mix of ‘Monte Carlo Exclusive Brand Outlets’, network of national chain stores and multi brand outlets. Their products in woollen hosiery segment are also sold under the brand names of ‘Canterbury’, for premium quality woolen hosiery garments and ‘OWM’, for their specialty worsted woollen yarn etc. including the hand knitting yarn. They also have landed properties admeasuring approximately 5.01 acres in Gurgaon and 12.70 acres in Chennai, which have been leased out and are contributing significantly to the overall revenues and profitability of the Company. These properties are in addition to the landed properties that they own in and around Ludhiana in which their manufacturing facilities are based.Their restated total income and restated profit after taxes in Fiscal 2006 were at Rs. 2,532.85 million and 148.48 million respectively. For the six months ended September 30, 2006, their total income and profit after taxes was at Rs. 1427.93 million and Rs. 101.57 million respectively.

OPERATIONS

The company is an integrated composite textile player manufacturing various types of worsted yarns, textile fabrics, woollen hosiery, denim fabric and readymade garments. Their operations basically consist of combing, dyeing, spinning, designing, knitting, weaving, marketing and retailing. They have a modern wool combing plant with a capacity of 2.5 million lbs per annum for manufacture of wool/blended tops from raw wool, acrylic tow and other fibers. Out of their total production of tops, around 80% is consumed internally for manufacture of yarn and balance 20% is sold or delivered after combing on commission basis. They also undertake combing operations on job work basis for external manufacturers of yarn based on their production schedule. Their dyeing section has a capacity of 20 tones per day to process tops, loose fibers and yarn. The spinning section is equipped with 26,248 spindles to produce different types of woolen/acrylic/blended/fancy yarn for hosiery, hand knitting and weaving. The hosiery yarn produced by them is consumed internally for their knitting operations as well as sold to external customers. They have weaving capacity consisting of 100 power looms to manufacture blankets, shawls etc. Their modern knitting facilities are capable for manufacture of up to 750,000 pieces per annum with different designs and patterns. They consume yarn produced by them and also source yarn from external market based on specific requirements for their knitting operations.

The production of woven garments are outsourced from various garment manufacturers (converters) selected by the Company. The selection of such converters is based on their evaluation of their facilities and their quality parameters. The selection of fabric and other accessories like thread for sewing, buttons etc. is done by our designers either sourced and supplied or intimated to these converters. The design and pattern of the garment to be manufactured is prepared by their designers. They depute their production supervisors at the facilities of each of these converters to

supervise the production and ensure the desired quality of garment produced to ensure that brand equity of ‘Monte Carlo’ brand under these garments are marketed does not get diluted.

Considering their core competence in the woolen textile sector and to further diversify their activities, they initiated the process of setting of a denim-manufacturing unit with a capacity of 20 million meters per annum at Village Jalalpur, Lalru, Punjab at an estimated cost of Rs. 1,050 million in three phases. The first phase has already been completed with a capacity of 10 million meters per annum. They intend to complete second phase with Capacity of 5 million meters per annum by January 2007 and addition of another 5 million meters per annum in third phase by June 2007. They intend to go for modernization/expansion/balancing of existing production capacities for manufacture of worsted yarn, setting up cotton/blended yarn spinning plant to meet out raw material requirement of denim plant, another captive power plant for their denim fabric plant and building retail chain of 150 stores to sell ready made garments under its brands ‘Monte Carlo’ and ‘Canterbury’.

In Fiscal 2006, they have commissioned a co-generation power plant with an installed capacity of 3.5 MW for captive use for their worsted yarn plant. This co-generation power plant meets the full requirement of power for the above-referred unit.

Existing and Forthcoming Manufacturing Capacities

The following table sets forth our existing capacities and proposed capacity in respect of our products:

PARTICULARS UNITS CAPACITIESEXISTING POST

EXPANSIONYarn Worsted woollen

spindles26,248 31,032

Textile Power looms 100 100Woolen top Lbs per annum 2,500,000 2,500,000Readymade Garments/ knitwears*

Pieces per annum 750,000 875,000

Denim fabric** Meters per annum

10,000,000 20,000,000

Cotton/Blended Spindles Nil 14,400

yarnRotors Nil 2,160

*Does not include ready-made garments of cotton segment, which are primarily outsourced by our Company.

** Capacity expansion to 20 million meters is entirely funded through term loans under TUFS

MANUFACTURING PROCESS

a) Wool Top :

The main raw material for the preparation of wool top is greasy wool, which is primarily imported from Australia. Greasy wool from different farms is mixed together to obtain a homogenous lot/batch for further processing. The lot/batch is then processed through scouring to remove natural grease, suint and dirt to make scoured wool. Scoured wool is then processed through carding machine to make the fibres parallel and to obtain carded sliver. Carded sliver is then processed through three gilling machine consecutively to further homogenize carded sliver. The homogenized carded sliver is then processed through combing process to remove VM, unwanted short fibres and dirt, such as, noils to make cleaned wool sliver. Combed wool sliver is further homogenized by mixing and drafting in gilling machines to obtain ecru wool top. The ecru top is subjected to dyeing process as per specific requirements and further processed through gilling and

combing process to obtained homogeneous dyed re-combed tops. The following is a brief process flow chart of the wool top manufacturing process.

Wool Top Manufacturing Process

b) Worsted Yarn:

The grey tops/dyed tops (100% wool, 100% acrylic, acrylic/wool, polyester/wool, wool/viscose, wool/nylon or any other blends) is the basic raw material, which is processed on four gill boxes to make the fibres parallel, to even out the sliver weight by means of doublings and drafting, to mix the shades/blends homogenously and to reduce the sliver weight per unit length at different stages according to the count of the yarn to be spun. The out put sliver of the gill boxes is delivered in the cans. The sliver of the fourth gill box (finisher gill box) is fed on rubbing frames/roving machines like FM-7, FM-8, BM-12 or BM-14 to make the roving in the required weight per unit length according to the required spinning count of the yarn. The roving is wound on plastic bobbins for further processing or ring frames for converting the roving into yarn of the desired fineness (count) by

Raw wool Greasy

Scouring Carding Combing Bump Press

Blending and mixing

3 Stage Gilling Process

2 Stage Gilling Process

Dyeing and Re-combing

Grey/DyedTop

Packing

drafting and the desired twist is inserted in the yarn by means of ring traveler, which also helps in winding the yarn on spinning cops (bobbins). The spun yarn is run on auto coner machines to remove various objectionable faults (like neps, slubs, thin places and yarn count faults etc., which are developed during back processing), which are not desired in the fabric by passing the yarn through latest electronic yarn clearers and to splice the yarn ends to make knot free and defect free yarn. The auto-coned yarn is wound on plastic/paper cones for further processing. In case the yarn is required in single yarn form then the yarn is processed in yarn conditioning plant or volufil machine. In case of 100% wool, polyester/wool, wool/nylon, wool viscose or any other blends which do not have shrinkable fibres are steamed in yarn conditioning plant to set twist in the yarn so that the yarn do not give any snarling problem due to the twist on further process and the yarn like 100% acrylic, acrylic/wool or any other blends having shrinkable fibres are processed on volufil machine (cone to cone yarn bulking machine) to make the yarn bulky and soft for hosiery , knitting or weaving as per the specific requirement.

Worsted Yarn Process Flowchart

In case of ply yarns, i.e., 2 ply, 3 ply, 4 ply or 5 ply yarns, the auto coned yarn is run on assembly winding machine (cheese winding machine) & the plied yarn is wound on plastic parallel cheeses for further processing.The assembly wound plastic packages are run on two for one twisting machine for inserting the required twist to the plied yarn. Again, yarn like 100% wool, polyester/wool, wool/viscose, wool/nylon or any other blends, which do not have shrinkage fibres are processed in yarn conditioning plant and the yarn like 100% acrylic, acrylic/wool or any other blends having shrinkable fibres are processed on volufil machine.

Yarn, which are to be dyed in hank dyeing machines, are run on reeling machines for making hanks of the required circumference and weight. The hanks are packed in bundles and then bales and the bales are sent to dye house or godown as per the requirement. Yarn processed in yarn conditioning plant or volufil machine are packed in cartons/bales as per the requirement and transferred to godown for dispatch to the market.

c.) Lamb Wool Yarn:

Grey Tops/ Dyed Tops

Four stages giling process

Rubbing Frame/ Roving Frame

Ring Frame Auto ConerAssembly Winding TFO Reeling Packing

YCP

Volufil

EB-4 Godown

The basic raw material lamb wool is fed into blow room for mixing and blending with nylon, viscose, acrylic, cotton, angora etc as per requirements. The blend is then conveyed to carding bins where it is converted into sliver. The sliver is then converted into yarn on ring frame machine by drafting and twisting process. The yarn is then further processed on autoconer to obtain finished uniform yarn on cones.

d.) Knitted Garments:

The yarn is converted into knitted fabric panels of required design and shape through computerized flat knitting machine or circular knitting machine. The design of fabric is prepared through CAD system. The fabric is then passed through milling process to control the shrinkage of the panels & to improve the feel of the panels. The fabric is then further processed through panel pressing to remove wrinkles from washed panels. The processed knitted fabric panels is then cut into the required sizes and stitched to

prepare the knitted garment.

Knitted Garment Process Flow Chart

e.) Denim Fabric Manufacturing Process

In house Yarn /External Yarn

Flat Knitting/CircularKnitting Process

Batch Operation

Milling & PanelPressing

Yarn Testing

Design Inputthrough CAD

Fabricquality check

Finishing

Colour andshade testing

WareHousing

Historically, denim was a heavy weight fabric with two basic weaving structures, either as warp twill 3/1 or broken twill 3/1 with indigo colour used to get the ring dyeing effect (surface of the yarn would be dyed with Indigo whereas core would remain white i.e. undyed). However, with the change of time, denim has become a fashion fabric with lot of structural play in yarn and fabric structure combined with various colour effects, viz, indigo, indigo bottoming sulphur topping (IBST), sulphur bottoming indigo topping (SBIT), sulphur of various shades, vats and reactive dyes in combination with indigo. In addition, different wash effects & mechanical and chemical treatment on garments (like sand blasting, chemical blasting etc.) have made the denim garments highly fashionable and lovable products for the people of all ages and across the world.

Accordingly, creativity and innovation in products and process have become the key factor in denim business.There are generally two routes of producing indigo denim fabrics:

Rope Dyeing Route Slasher Dyeing Route

With the latest technological innovation, either of the two routes can produce wide range of denim products required by fashion driven customers. However, the right kind of spinning and post weaving processes are equally critical to deliver a product to customers at a cost perceived to be value of money. Generally, denim manufacturing process consists of:

Spinning: From Blow room to yarn manufacturing; and Fabric manufacturing and finishing process:

From Warping to Finishing they have started denim project with the 2nd phase, warping to finishing, first to deliver the product to the customers early. Their denims project has been designed for producing 20 million meters of fabric per year through rope dyeing route. They have already commissioned production with capacity of 10 million meters in March 2006, which is being extended to 15 million meters per year from early 2007 to be further extended to 20 million per annum some time by mid 2007.

Yarn Store

Balling Warping

Indigo - Dyeing

LongChain Bemaing

Sizing

Weaving

Finishing

Shrinking

Inspection

Finished Cloth Store

Winding of Rests

Drawing - in

RAW MATERIAL

Their primary raw material is merino grade greasy wool with 17.5 to 28 micron thickness and minimum fibre length of 65 mm, which is primarily imported from Australia and New Zealand. The imports are made through agents who deal primarily in wool. Being organic commodity, the production of wool is seasonal but the supply is available all round the year through wool suppliers who store it round the year, however the market rates for the same do keep on fluctuating during the year. The experience gained by the company over the last fifty years enable them to anticipate the price movements and procure wool at reasonable rates. Other inputs, such as, acrylic fibre/tow, nylon staple fibre and angora fibre are sourced from Thailand, Japan, Taiwan, China etc., and also from the domestic market.Further they require cotton yarn of count mainly from four to seven for their denim fabric operations. The cotton yarn is primarily sourced from open market from Punjab and their other group companies.

Estimated Raw Material and Stores Requirement for existing operations during current year

PARTICULARS UNITS REQUIREMENT PER ANNUM

Raw Materials

Raw Wool Greasy/Scoured Tonnes 2,887.20

Acrylic Fibre/Tow Tonnes 4,159.90

Nylon Staple Fibre/Top Tonnes 416.00Angora Rabbit Hair Tonnes 61.00Cotton Yarn Tonnes 6,662.60

MARKETING AND DISTRIBUTION NETWORKS

Wool / blended tops

Currently wool top/blended is sold in domestic market in and around Ludhiana to various yarn producers primarily through local agent’s network. The company also sells wool top to various yarn producers on direct basis. Wool top being an intermediary base product for manufacture of worsted woollen yarn has ready market in form of various worsted woollen yarn manufacturing companies based at Ludhiana and hence does not require much marketing and logistical support.

Worsted Yarn, Lamb Wool Yarn and Hand Knitting Yarn

The company sells their worsted yarn, lamb wool yarn and hand knitting yarn both in the domestic and international markets. In the domestic market all types of yarn are sold through the network of dealers based in potential geographical market of Northern India, North-West India, North-East India and Central India. Ludhiana being the hub for the woollen hosiery, a substantial part of these yarn is sold in Ludhiana and for that purpose, they have appointed five dealers exclusively engaged in the sale of yarn supplied by their Company. These dealers, apart from promoting the sale of their yarn in the market, also give them a feed-back regarding consumption/demand pattern, i.e., the quality, colour, the base fibers and other features of the products which are in demand in the market.They also sell their yarn to few export intermediaries for ultimate export to fabric manufacturers abroad. In international markets, they sell their yarn on specific order received through the network of international agents on commission basis. Currently, company sells around 80% of their production in the domestic market and the balance is exported through international agents. In the domestic market, the main selling season for their yarn spans from April to December.

Woolen Hosiery Garments

Primarily, the company sells their woollen hosiery garments in the domestic market under our brands ‘Monte Carlo’ and ‘Canterbury’. The brand ‘Monte Carlo’ was introduced in 1985. Since then it has become a well-known name for woollen hosiery garments in India. Their ‘Monte Carlo’ brand has been recognized as a ‘Superbrand’ since Fiscal 2003. In the Fiscal 1995, they introduced another brand ‘Canterbury’ for selling our premium range of knitted garments. The woollen hosiery garments are distributed to wide network of dealers through respective area agents and also sold directly through the network of exclusive franchisees spanning across major cities in India. Their woolen hosiery garments are produced and sold on the basis of orders received through the network of area agents across various states. The area agents collect the orders from dealers after displaying them various designs and patterns. They derive 80% of their sales through their dealer network and balance 20% sales from their exclusive franchisee/owned store network. Currently the company has the network of 23 exclusive franchisee/owned stores across various cities. They also sell woollen hosiery garments directly to few organised retailing chains.The dealers and the franchisees of the Company are backed by appropriate advertising campaign for their brands covering print media, major television channels, hoardings etc by their Company. They also adopt appropriate discount policy to ensure fast movement of their products. Woollen hosiery garments are mainly sold in the months from October to March. However, cotton/cotton blended knitted garments are sold round the year.

Cotton Garments

The company has introduced cotton garments in domestic markets very recently. They sell these garments through their dealer as well as exclusive franchisee network set up by them for their woollen hosiery garments. They have introduced a range of high quality woven garments especially cotton based shirts and trousers under their established brand ‘Monte Carlo’ to capitalize on the goodwill and reach of their well known brand.

Monte Carlo Distribution Network

Under this format, they manage their stores either directly or by entering into franchisee agreements under the name ‘Monte Carlo Exclusive Brand Outlets’. Currently, they have 23 exclusive outlets across various cities in the country including the two stores in Ludhiana and Gurgaon, which is owned by their Company. The sizes of these outlets ranges from approximately 500 square feet to approximately 1,500 square feet with a total retail space of about 25,567 square feet retail area as on October 31, 2006. Under this format the sales are booked on a direct sales basis.

National Chain Stores and Multi Brand Outlets

These are the various departmental stores such as Shopper’s Stop, Pyramid, Ebony etc. through which they sell their ‘Monte Carlo’ products. These chain stores allocate a specific space in their outlets for a particular brand on a ‘shop-in-shop’ basis. The space allocated and the location within the store depends upon the importance of the brand to the total portfolio of the departmental store. They also have significant presence through Multi Brand Outlets (MBO). These are the various stores, which have a local presence. These stores are popular in the specific cities or towns and such stores have on display a wide variety of brands.

Denim Fabric

Adding to their wide product range, they have started manufacturing of denim fabric in Fiscal 2006. They sell their fabrics only in domestic market through network of agents directly to dealers or garment manufacturers. They also sell their fabric directly to various reputed branded garment manufacturers or brands like Arvind Brands, Levis, Numero Uno, and Shoppers’ Stop. Currently they generate around 75% of their sales through their dealer network and balance 25% from their direct sales to various brands or garment manufacturer.Since this is the first year of operation for their denim fabric division, they are in the process of stabilizing their operations and further increase the reach of their

distribution network as well as build direct linkages with various domestic and international brands for selling their denim fabric.

INTELLECTUAL PROPERTY

They own the exclusive right to use the trademark ‘Monte Carlo’, which has been recognized as ‘Superbrand’ by International Society for Superbrands for the woollen hosiery garments since 2003. they also own the trademark for ‘OWM’. They have applied for registration of trademark ‘Canterbury’ with the Trade Mark Registry. Detailed below are the trademarks they own or have applied for:Their Product Logos Our Corporate LogoFor details relating to their trademarks, see section titled “Government and Other Approvals” beginning on page [●] of this Draft Red Herring Prospectus.

INSURANCE

Their operations are subject to hazards inherent in large-scale textile manufacturing, such as risk of equipment failure and work accidents. They also are subject to the effects of natural disasters and acts of terrorism. The hazards they face include those that may cause injury and loss of life, damage to and destruction of property and equipment and environmental damage. They have obtained what they consider to be adequate insurance for their facilities and have also obtained automobile insurance policies and workmen compensation policies as well as hospitalization and group personnel accident policies for their permanent employees as may be required under the various jurisdictions where their facilities are located.

HUMAN RESOURCES

As of October 1, 2006 they have around 4,182 employees comprising of 740 administrative/managerial staff, 871 skilled workers and 2453 unskilled workers. they have a strong ongoing commitment to the health and safety of their employees and achieving sustainable development in harmony in environments in which they operate. A significant portion of their staff has been working with them for over 20 years.

QUALITY CONTOL

They have established a quality management system (QMS) and have implemented the same throughout the Company. A system has also been developed to ensure continual improvements in the effectiveness of the QMS.

A management review committee under the chairmanship of Mr. Sandeep Jain, the Executive Director has been constituted for conducting the review of the Company’s quality management system, quality policy and objectives. The committee reviews the system at least once in six months for ensuring its continuing suitability, adequacy and effeteness.

QUALITY POLICY

They are committed to provide total customer satisfaction by meeting all requirements and continual improvement of quality management standards performance. The following are the objectives of their quality management system:

To enhance customer satisfaction Regular review and Up gradation of technology Cost reduction in operations

ISO 9001:2000 Certification

The Quality Management System of the Company has been certified to conform to the Quality Management System Standard: ISO 9001:2000 by DNV Certification B.V., the Netherlands for the manufacture and supply of dyed and grey tops and yarn in worsted wool, pure wool, lamb wool, acrylic wool blends and polyester wool blends and Angola, berthia and serge fabrics. The original certificate was valid from June 19, 2001 to June 19, 2004, which has been further extended till June 19, 2007.

AWARDS AND RECOGNITIONS

The following is the list of awards/recognitions won by our Company:Year Awards/Recognitions1995 to 1999 ‘Best Exhibited Product’ by the Woolmark Company for ‘Monte Carlo’ woollen

Year Awards/RecognitionsHosiery garmentsSince 2003 ‘Superbrand’ recognition for ‘Monte Carlo’ woollen hosiery garments byInternational Society for Superbrands

INDUSTRY AFFILIATIONS

The Company is a member of some industry associations. These industry associations work towards betterment of the overall industry. A list of our affiliation with major industry associations is in the table below:Name of the Industry Association Objective of the Industry AssociationWool and Woollen Export PromotionCouncilMembership is essential for export of our woollen productsSynthetic Rayon Textile ExportPromotion CouncilMembership is essential for export of our acrylic/blended yarns

COMPETITION

The textile and apparel industry is highly competitive. No single company dominates the industry. They seek to compete in the domestic and export markets on the basis of the price, range, quality of our products, our delivery times and customer service capacities.In the woollen hosiery garments range, which is sold under our brand ‘Monte Carlo’ they do not have any significant competition and they enjoy brand loyalty from their customers.In respect of their woollen/blended worsted yarn business, they compete primarily with other large organized players based in North India as well as a large segment of small unorganized players based mainly in Punjab.The main competitors of their woollen/blended worsted yarn business are Vardhman Textiles Limited, Jayshree Textiles Limited and Malwa Cotton Mills Limited. As regards their branded woven garments primarily cotton shirts and trousers, they are new entrant in already highly competitive market. They face competition from many established domestic as well as international brands. However, the woven cotton textile industry is highly competitive and no single company dominates the industry. They seek to compete in the domestic market on the basis of the price, range, and quality of our products, brand name and the delivery times.In respect of denim fabrics business, they compete primarily with other fabrics manufacturers. The main competitors of their denim fabric business in India are Arvind Mills Limited, Aarvee Denims Limited and Raymond Limited. However, with their focus on value added denim fabric segment and advanced product and process design initiatives, they are well positioned to face competition more efficiently.

HEALTH, SAFETY AND ENVIRONMENT

They comply with applicable health, safety and environmental legislation and other requirements in their operations in different jurisdictions. To ensure effective implementation of their practices, they seek to identify and evaluate potential hazards and to develop and put in place adequate controls. They also emphasize training in occupational health and safety procedures as an integral part of the operations. Their environmental management policy requires compliance with all local, state and central laws and regulations concerning environmental protection and related matters. Environmental legislation in India includes the Environmental Protection Act, 1986, the Water (Prevention and Control of Pollution) Act, 1974, the Air (Prevention and Control of Pollution) Act, 1981. Detailed rules and regulations have been prescribed under these acts, including rules governing the management of hazardous waste and the manufacture, storage and import of hazardous chemicals and management of noise pollution. They are in compliance with all applicable health, safety and environment regulations in the jurisdictions where they conduct our operations.They have obtained necessary environmental consents from the Punjab State Pollution Control Board. They are subject to regular inspections for the discharge of water effluents and the emission of gases for all of their plants. They believe that we are in compliance with all applicable environmental laws and regulations.

CORPORATE SOCIAL RESPONSIBILITY

Corporations do not create a team. It’s a good team, which creates a good corporation. the fully realize this fact and therefore provide their team with the best working and social environment. From a highly creative office atmosphere to an eco-friendly manufacturing infrastructure, their business philosophy is finely guided by protecting the environment and the interest of its people, customers and business associates. From healthcare to international standards of social compliance, they treat every issue as a means to higher efficiency of their social responsibility.

OFFICES AND PRODUCTION FACILITIES

They have acquired immovable properties for setting up their offices and production facilities for the purpose of business. These properties are held either on a freehold or a leasehold basis. Their registered office is located in Ludhiana and manufacturing facilities are based in Ludhiana and Lalru in Mohali, Punjab. Set forth below is a brief summary of the significant properties held by the Company:

Office/Facilities Location Area(sq yards)

Nature of Interest

(* Vide a deed of conveyance dated December 10, 1986, the Haryana Urban Development Authority (“HUDA”) transferred the premise to the Company for a consideration of Rs. 1.30 million on the condition that the Company shall not transfer by way of either sale mortgage or otherwise the site or any title or interest therein (except by way of lease on monthly basis) without the permission of HUDA and until a building has been constructed on the said premise up to a minimum of 10 percent on the land and shall use the land only for industrial purposes. They have subsequently sub-leased the premise admeasuring 255,996 sq. meters to erstwhile G.E Capital International Service (“GECIL”) presently known as Genpact India, engaged in information technology industry for a consideration of an interest free refundable security deposit of Rs. 40.95 million and monthly rent of Rs. 8.00 million. The lease is for a period of 5 years commencing from July 1, 2006 and ending on June 30, 2011. As per the letter dated June 21, 2006 from HUDA, granting permission to our Company, to sub-lease the premise to GECIL, the Company is required to make good any loss that may be incurred by HUDA, due to this sub-lease. Additionally if there arises any litigation in relation to this lease agreement with GECIL, they would be liable to defend HUDA in the same.**Vide sale deed dated December 26, 1977 M/s National Construction Corporation, (“NCC”) transferred the premise to the Company for a consideration of Rs. 0.22 million on the condition that the Company would use the premise only for official purposes and not sub-let, sell transfer assign or part with the premise without the

prior written permission of NCC. Additionally the Company has agreed to pay brokerage fee at the rate of 2% on the purchase price.)CONCLUSION

Oswal group of companies is a very reputed and genuine name in the industry of textiles which basically includes woolens, denims, and readymade garments etc. The company has its core competency in woolens but it has excelled itself in the area of denims and ready made garments also with the name as Monte Carlo and Canterbury; the two well known brands. It has the manufacturing units with an excellent manufacturing capacity and well processed system for each and every single product. Their manufacturing process involves all the necessary steps which are required to produce a quality product because the raw material used by them is of super quality and is very much distinct in the market. Also they have involved various best quality machines which are required for the production in such a manner that a specify machine will work for a specific purpose and will produce an excellent product to be further processed. This particular style opted by Oswal group makes them and their product unique and best in the global market which makes them an industry leader. While talking about the distribution network of Oswal group of companies they are very specify about it and they believe in direct sales based format where they operate their own “Monte Carlo exclusive brand outlets”.

Oswal group owns a trademark in Monte Carlo as its intellectual property where it is recognized as a super brand in global market. They have also registered for trademark for its sub brand Canterbury. They have established a proper QUALITY CULTURE in their organization which is well controlled and regulated for improving the effectiveness of the organization. According to their quality policy they are fully committed towards the total customer satisfaction and continual improvement for better standards of performance. As we all know that textile and woolens sector is highly competitive industry where everyone is striving to meet the demands of the customers and establish themselves as best suppliers of woolens and garments as to earn the trust of the customers, In such a scenario Oswal group is continuously performing good and is showing a growing trend of assurance and quality in the eyes of customers.